Creasey v Breachwood Motors Ltd [1993] BCLC 480 is a UK company law case concerning piercing the corporate veil

Piercing the corporate veil

Piercing the corporate veil or lifting the corporate veil is a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders or directors. Usually a corporation is treated as a separate legal person, which is solely responsible for the debts it...

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Facts

Mr Creasey was dismissed from his post of general manager at Breachwood Welwyn Ltd. He claimed that this constituted wrongful dismissal

Wrongful dismissal

Wrongful dismissal, also called wrongful termination or wrongful discharge, is an idiom and legal phrase, describing a situation in which an employee's contract of employment has been terminated by the employer in circumstances where the termination breaches one or more terms of the contract of...

, in breach of his employment contract

Employment contract

A contract of employment is a category of contract used in labour law to attribute right and responsibilities between parties to a bargain.On the one end stands an "employee" who is "employed" by an "employer". It has arisen out of the old master-servant law, used before the 20th century...

. However, before he could claim, Breachwood Welwyn Ltd ceased trading, and all assets were moved to Breachwood Motors Ltd, which continued the business. Other creditors were paid off, but no money was left for Mr Creasey's claim, which was not defended and held successful in an order for £53,835 against Breachwood Welwyn Ltd. Mr Creasey applied for enforcement of the judgment against Breachwood Motors Ltd and was successful. Breachwood Motors Ltd appealed.

Judgment

Mr Richard Southwell lifted the corporate veil to enforce Mr Creasey's wrongful dismissal claim. He held that the directors of Breachwood Motors Ltd, who had also been directors of Breachwood Welwyn Ltd, had themselves deliberately ignored the separate legal personality of the companies by transferring assets between the companies without regard to their duties as directors and shareholders.

Significance

The case was heavily doubted by the Court of Appeal in Ord v Belhaven Pubs Ltd

Ord v Belhaven Pubs Ltd

Ord v Belhaven Pubs Ltd [1998] 2 BCLC 447 is a UK company law case concerning piercing the corporate veil.-Facts:Mr and Mrs Ord ran the Fox Inn in Stamford, Lincs. They were in an ongoing dispute with the freehold owner, Belhaven Pubs Ltd, for misrepresentation about the level profitability of the...

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